The world of retail is quickly spreading across channels. Customer touch points are growing – they now include the physical store, web, mobile, catalogue, phone orders, partner sales (such as in flight duty free shopping) and vending machines. Retailers want to strengthen these channels. But it is not easy. There are two distinct issues here: the first is improving sales across channels and the second is maintaining consistent communication with the customer across channels. How large is the impact of a good omni-channel strategy that uses Big Data to deal with both issues? An Economist Intelligence Unit (EIU) study commissioned by Wipro called The Data Storm: Retail and the big data revolution points to the benefits of using Big Data. More than half the respondents in the study (54%) said that Big Data brought gains in multi-channel sales and made multi-channel customer tracking and management more profitable (52%). But the real benefits of an omni-channel strategy accrue from the ability to communicate and create deeper engagement and build stronger relationships with the customer rather than provide more options to buy.
In the EIU study, 38% of respondents agreed that managing differing pricing and margin strategies over varying channels is a major headache. This means that over a third of retailers are unable to communicate and interact coherently and consistently with customers across channels. The outcome is confusion in the customer’s mind, erosion of customer loyalty and declining sales. Clearly, there is a need to step beyond commerce and urgently focus on omni-channel communication capabilities.
The reason for the inconsistent communication is not difficult to deduct. Poor channel integration is at the core. Our study revealed that only 38% retailers had integrated their online and offline sales targets and budgets to reflect how customers now shop in a multi-channel world. Edgell Knowledge Network, a retail research network, has found that retailers themselves estimate that a lack of cross-channel capability can lower sales by 4.5%.
The issue of communication across channels is compounded by the fact that with the proliferation of social media, communication is two way. There is greater interaction with the customer across channels. It is hardly surprising then to find that retailers are changing their communication strategy. American fashion retailer Nordstrom recently released its new fashion catalogue on Pinterest (Nordstrom then placed signs in its brick and mortar stores telling customers to look up the online catalogue for the latest designs). Customers didn’t only look up the online catalogue; they also had the opportunity to share their opinion about the designs with their online communities – thus becoming Nordstrom brand advocates.
Retailers need to wake up to the fact that an omni-channel presence is not only about sales – it is about growing the brand, improving relationships and, importantly, building trust. What do you think??